Mobile operator Cell C turned a small profit of R2.8 million in the six months ended June 30 2016, an improvement from a loss of almost R1.2 billion in the same six-month period a year earlier.
It’s the first time that Cell C’s full financial results have been made public. The numbers are contained in a circular published by Blue Label Telecoms on Tuesday. JSE-listed Blue Label is acquiring a 45% stake in Cell C for R5.5 billion as part of a broader restructuring of the telecommunications operators aimed in part at reducing its debt to below R8 billion.
The circular reveals that in the first six months of 2016, Cell C recorded revenue of just shy of R7 billion, up from R6 billion a year ago (see tables below for detailed financial information).
In the 2015 financial year, to December 31 2015, Cell C reported revenue of R13.2 billion and a net loss of R5.6 billion. In 2014, those same numbers were R11.6 billion and R4.9 billion respectively, and in 2015 they were R11.5 billion and R3.5 billion respectively.
Net debt at the end of 2015 was R20 billion, from R14.3 billion in 2014.
Cell C attributed the growth in revenue in the first half of 2016 to an increase in service spend and equipment sales. The prepaid segment was the main driver in service spend due to growth in the core customer base, significant growth in data usage and new product offerings. Equipment revenue increased due to an increase in demand for smartphones and new handset financing arrangements.
Profit before equity-accounted earnings, net finance costs and tax came to R628.8 million, from a loss of R89.2 million in 2015. Total cash generated from operations was R2.2 billion, up from R521.2 million previously.
Non-current and current liabilities totalled an eye-watering R29.6 billion, from R27.1 billion at the end of December 2015.
Its total liabilities exceeded its total assets by R12.2 billion as at end-June 2016. However, the company and its shareholders have “demonstrated that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business”.
“The directors and management have reviewed the group’s budget and cash flow forecast for the period to September 30 017 [and] … there is sufficient funding available to enable the group to meet its obligations as they fall due.”
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